Question

Discuss by showing what governments around the world are doing to deal with each type of market failure.

Answer 1

Type of matket failure

1. productive and allocative
2. Monopoly power
3. missing markets
4. incomplete markets demerit goods
5. negative externalities
6. property right
7. Inequality.    Steps taken by the government to deal with market failure.

   -Tax -subsidies -laws and regulations -pollution permits -advertising -Nudges -government price control -change in property rights -policies to reduce unemployment -labour market regulations

   raising price of goods to reduce demand Government paying part of it -like maximum age of buying alcohal -firms given right to pollute upto some extent -government warning to the dangerous products - making it harder to purchase demerit goods -maximum price/minimum prices/buffer stocks schemes to stablise prices -giving property rights over river to sue firms who pollute -education ,training,better information -minimum wages,maximum working week

   Correcting the market, once it fails, is one in all the foremost vital responsibilities of the govt. The personal sector too must play a district by not resorting to unfair practices. Correcting market failure may be a major part of welfare political economy. Falling markets have an effect on the general economy of a rustic. With economic process being the norm nowadays, a fall in one country’s market, incorporates a ripple impact on others. thus once stock index takes a success, the results may be felt on Nikkei and alternative indexes